Washington, D.C.

House passes tax bill in major step toward overhaul

13 Republicans, including Faso and Stefanik, vote against legislation
House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) confer.
House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) confer.

WASHINGTON — With 227 Republican votes, the House passed the most sweeping tax overhaul in three decades on Thursday, taking a significant leap forward as lawmakers seek to enact $1.5 trillion in tax cuts for businesses and individuals and deliver the first major legislative achievement of President Donald Trump’s tenure.

The swift approval came two weeks after the bill was unveiled, without a single hearing on the 400-plus-page legislation and over the objections of Democrats and 13 Republicans. The focus now shifts to the Senate, where Republicans are quickly moving ahead with their own tax overhaul, which differs in substantial ways from the House bill. The Senate Finance Committee was expected to vote on the legislation Thursday evening, with the full Senate potentially voting after Thanksgiving.

The ability to enact the tax overhaul still faces significant obstacles, with several Senate Republicans expressing concerns about the effort. Senate leaders, who want to pass legislation along party lines, can afford only two defections in order to win passage through the narrowly divided chamber. In a blow to Senate Republicans, an analysis of their plan released Thursday projected the bill would actually raise taxes on low-income Americans within a few years.

Republican lawmakers must also find a way to bridge the big differences between the two bills, a hurdle given the varied priorities of lawmakers in the two houses. For instance, the Senate bill makes the individual income tax cuts temporary and delays implementation of the corporate tax cut by one year. It also includes the repeal of an Affordable Care Act provision requiring that most people have health insurance or pay a penalty.

“We’ve got a long road ahead of us,” Speaker Paul Ryan of Wisconsin said after the 227-205 vote. “This is a very, very big milestone in that long road.”

The speed with which the House passed a significant rewrite of the U.S. tax code stunned many in Washington, who have watched previous legislative efforts by Congress succumb to gridlock.

“It’s a combination of shrewd legislative maneuvering and political necessity,” said Ken Spain, a former official with the National Republican Congressional Committee who now lobbies on tax issues. “The result is landmark legislation moving at breakneck speed. It’s a monumental accomplishment.”

Republicans are under intense pressure to get legislation to Trump’s desk by Christmas, especially after failing in their attempt to dismantle the Affordable Care Act this year. Lawmakers also want to push the legislation through quickly to avoid giving lobbyists and Democrats time to mobilize, a strategy that seemed to be validated with the House approval, which came with little drama or consternation. The political uncertainty surrounding the Dec. 12 Alabama Senate race, which could result in Republicans losing a seat or gaining an uncertain ally, is also a factor in the swift pace.

EDITORIAL: Faso, Stefanik step up with ‘no’ on tax bill vote
RELATED: Senate plan would raise taxes on poor, report says

Republicans cannot afford a replay of their health care catastrophe, during which the House managed in May to pass a repeal bill but the Senate could not follow suit. After the House approved its repeal bill, Trump hosted Republican lawmakers at the White House for a Rose Garden celebration. The exuberance was more contained Thursday as the Senate continued its work, with Trump sending congratulations via Twitter.

“I hope they have better luck with this issue than they had with the health care issue,” Rep. Mark Amodei, R-Nev., said of the Senate’s efforts.

Democrats, who have been sidelined in both the House and Senate, continued to denounce the tax overhaul, warning it would benefit corporations and the rich at the expense of the middle class. But Republicans are planning to pass their tax legislation using procedures that would allow it to gain approval without any Democratic votes in both chambers, leaving Democrats with little recourse aside from trying to sway public opinion.

“The bill Republicans have brought to the floor today is not tax reform,” said Rep. Nancy Pelosi of California, the House Democratic leader. “It’s not even a tax cut. It is a tax scam.”

The House bill would cut the corporate tax rate to 20 percent from 35 percent. It collapses the number of tax brackets to four from seven, switches the United States to an international tax system that is more in line with the rest of the world and eliminates or scales back many popular deductions, including one for state and local taxes.

It also roughly doubles the standard deduction that most taxpayers claim on their tax returns and increases the child tax credit to $1,600 per child from $1,000. The Senate bill, by contrast, increases the child tax credit to $2,000 per child and lowers the top marginal tax rate to 38.5 percent, from 39.6 percent. The House does not lower the top marginal tax rate for the wealthiest.

The Senate plan also does not fully repeal the estate tax, while the House plan eventually scraps it entirely. The tax cuts for individuals in the Senate plan expire at the end of 2025, while those in the House plan would be permanent.

House Republican leaders prevailed Thursday despite facing opposition from many of their members from New York and New Jersey, who have fought to preserve the deduction for state and local taxes, an important provision for many of their constituents given the high taxes in those states.

The House bill allows the deduction of up to $10,000 in property taxes, but that provision was not enough of a concession for them.

Twelve of the 13 Republicans to vote against the bill were from New York, New Jersey and California, three states with high taxes.

“I just have too many constituents who are going to see their taxes go up,” said Rep. Lee Zeldin, R-N.Y., who represents a district on Long Island. “You’re taking more money from a place like New York in order to pay for deeper tax cuts elsewhere,” Zeldin said.

The deduction for state and local taxes stands as one of the biggest possible showdowns between the House and the Senate in the weeks to come. The Senate has proposed getting rid of the deduction entirely, a move that would almost certainly drive away additional House Republicans who are from high-tax states.

Rep. Kevin Brady, R-Texas, chairman of the Ways and Means Committee, made clear Thursday that the tax effort was far from over.

“The intent of our tax reform bill is to achieve tax relief for individuals at every income level in every state,” he said. “There are still some areas where we will and can make improvements.”

The Senate proposal faces an uncertain future, given the reservations of a handful of Republican senators. Republicans have a narrow 52-48 majority in the Senate, leaving them with little room for defections. They also have limited room to maneuver, as the tax overhaul can add no more than $1.5 trillion to federal deficits over a decade.

On Wednesday, Sen. Ron Johnson, R-Wis., became the first member of his conference to come out against the tax plan. The votes of several other Republican senators, including Susan Collins of Maine and Bob Corker of Tennessee, are also far from assured.

A new analysis of the Senate bill by the congressional Joint Committee on Taxation could further complicate the bill’s trajectory. The committee said Thursday that in 2021, the legislation would increase taxes for those earning $10,000 to $30,000. By 2027, after the individual tax cuts expire, the committee projected, people earning $75,000 or less would face higher taxes.

“You’ve targeted the relief to help the wealthy, and the middle-income families are going to get stuck with it,” said Sen. Benjamin L. Cardin, D-Md.

Republicans said the appearance of a tax increase for low-income people was a mirage resulting from arcane fiscal math. Because Americans would no longer be required to have health coverage, some are expected to go without it. In turn, those people would no longer receive subsidies, in the form of tax credits, for insurance that they do not purchase.

Passage of the tax bill in the Senate is unlikely to be as drama-free as Thursday’s approval in the House, given the close divide between the two parties and the outsize influence that each individual Republican senator holds as a result.

Senate Democrats, like their counterparts in the House, have assailed the tax overhaul, but they now face a challenge in blunting the Republicans’ momentum.

“We’ve all known that trying to get the word out about taxes is a bigger challenge than health care,” said Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee. “It’s like listening to somebody discuss prolonged root canal work. This is tedious stuff.”

Categories: News

Leave a Reply